Q3/11 Results Presentation. Deutsche Telekom. November 10, 2011 - PowerPoint PPT Presentation

Q3/11 – Results Presentation. Deutsche Telekom. November 10, 2011

Disclaimer. This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forward-looking statements include statements with regard to the expected development of revenue, earnings, profits from operations, depreciation and amortization, cash flows and personnel-related measures. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom’s control. Among the factors that might influence our ability to achieve our objectives are the progress of our workforce reduction initiative and other cost-saving measures, and the impact of other significant strategic, labor or business initiatives, including acquisitions, dispositions and business combinations, and our network upgrade and expansion initiatives. In addition, stronger than expected competition, technological change, legal proceedings and regulatory developments, among other factors, may have a material adverse effect on our costs and revenue development. Further, the economic downturn in our markets, and changes in interest and currency exchange rates, may also have an impact on our business development and the availability of financing on favorable conditions. Changes to our expectations concerning future cash flows may lead to impairment write downs of assets carried at historical cost, which may materially affect our results at the group and operating segment levels. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, our actual performance may materially differ from the performance expressed or implied by forward-looking statements. We can offer no assurance that our estimates or expectations will be achieved. Without prejudice to existing obligations under capital market law, we do not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise. In addition to figures prepared in accordance with IFRS, Deutsche Telekom also presents non-GAAP financial performance measures, including, among others, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBIT, adjusted net income, free cash flow, gross debt and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. 2

Agenda. Deutsche Telekom Results Presentation. René Obermann CEO Timotheus Höttges CFO 3

Q3 2011: Solid quarter – 75% of full year guidance achieved. Group revenue of €11.0 billion (-4.1%) and adj. EBITDA of €3.9 billion (-2.7%)  FCF at €1.7 billion in Q3/11 well on track to achieve full year target  Adj. net income increases 49% to €1.3 billion from €0.9 billion in Q3/10  Save for service contribution of €1.5 billion in 9M.  Germany: highest adj. EBITDA margin of 41.5% due to opex reductions of €0.3 billion in Q3 alone  Newly launched “Entertain” via satellite with 50k subscriptions in first month  466k contract customer net adds in mobile  Mobile service revenue trend stabilization in Q3  No signs of meaningful SMS cannibalization via apps  Line losses in fixed improved by almost 40% year over year  Europe: adj. EBITDA margin further improved to 35.8%  Greece with ongoing improvement in revenue and EBITDA trends  Strong increase in adj. EBITDA in the Netherlands (+24%)  Adj. EBITDA in the Czech Republic (-19%) impacted by regulation and one-off effect  US: Q3 adj. EBITDA growth of 9.2%,  Adj. EBITDA margin at 27.8%  Net adds improved quarter over quarter in a challenging environment  Full year 2011 Guidance re-iterated 4

Q3/11 Overview. Continuing and discontinued operations. Revenue (€ million) Continuing operations Adj. EBITDA (€ million) Continuing operations -2.7% -4.1% 11,461 3,992 3,884 10,990 -17 -3 -105 -454 Q3/10 F/X Organic Q3/11 Q3/10 F/X Organic Q3/11 Revenue Q3/10 vs. Q3/11 (€ million) Adj. EBITDA Q3/10 vs. Q3/11 (€ million) 2,523 6,317 Germany Germany 2,490 6,004 1,465 Europe 4,123 1,388 Europe 3,873 222 SYS 204 2,205 SYS 2,256 -192 GHS -150 4,143 Q3/10 Q3/10 USA 3,683 1,028 Q3/11 USA Q3/11 1,025 5

Q3/11 Key financials. (€ million) Q3/10 Q3/11 change in % Revenue from Continuing operations 11,461 10,990 -4.1% Revenue incl. the US 15,601 14,670 -6.0%  Adj. EBITDA from Continuing operations 3,992 3,884 -2.7% Adj. EBITDA incl. the US 5,021 4,907 -2.3%  Adj. net profit 867 1,291 48.9% Net profit 933 1,069 14.6% Adj. EPS (in €) 0.20 0.30 50.0% EPS (in €) 0.22 0.25 13.6% Free cash flow 1 1,882 1,706 -9.4% Cash capex 1 2,036 2,114 3.8% 6 1) Before dividend payments and spectrum costs in Europe of €63 million in Q3 2011

2011 guidance reiterated. As a result of the sale of T-Mobile US guidance of “around FY Guidance adj. EBITDA and achievement after 9M  19.1 billion” split into: Discontinued operations: US with stable EBITDA over  FY 2010 of around US$5.5 billion or around €4.2 billion based on F/X-rate of 1.33 (average rate of FY 2010). In 9M €163 million lost in currency translation. ~ 19.1 Continuing operations: around €14.9 billion  Free cash flow guidance unchanged at stable to slightly  14.9 14.2 = 75% ~ growing over FY 2010 of €6.5 billion Guidance assumes constant currency (average exchange 11.3 = 76%  rates of 2010). Free cash flow guidance not including €0.4 billion for PTC settlement Group ex. US Group incl. US 1 Guidance achieved in 9M 7 1) US-EBITDA translated at 1.33 guidance f/x

US: cost discipline supports margin. Service revenues (US$ million) Net adds (‘000) 1 Contract -1.8% Prepaid 312 283 228 231 4,607 4,615 190 4,556 4,543 4,525 -54 -186 -251 -281 -382 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Adj. EBITDA (US$ million) and adj. EBITDA margin ARPU development (US$) 27.8 Blended ARPU 25.4 25.4 24.8 23.1 Data-ARPU (US GAAP) 14.0 13.6 13.1 12.8 12.4 +9.2% 1,450 46 46 45 45 45 1,360 1,328 1,283 1,193 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 8 1) Walmart Family Mobile customers reclassified as contract customers, Q3/10, Q4/10, and Q1/11 restated accordingly.

Germany: strong cost discipline results in further improved EBITDA margin. Revenue (€ million) 1 Adj. EBITDA (€ million) -1.3% -5.0% 2,523 2,490 2,439 6,317 6,442 2,358 2,384 5,991 5,989 6,004 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Adj. opex (€ million) Adj. EBITDA margin (in %) 41.5 42 -7.8% 40.7 41 39.9 39.7 +1.6pp 40 39 4,262 3,927 3,734 3,664 3,621 38 36.6 37 36 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 9 1) Q3 includes MTR-cut of approximately €58 million, adjusted for MTRs revenue decrease would have been 4%

Germany revenue: continued focus on data & TV opportunity. Fixed network revenues (€ million) 1 Mobile service revenue 2 (€ million) -5.1% +0.1% 4,376 4,242 4,063 4,045 4,027 1,813 1,815 1,784 1,747 1,767 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 2play + 3play customers (million) Mobile data revenue (€ million) and as % of ARPU double play triple play +26% +3.0% 409 410 384 12.0 12.1 12.2 12.2 11.8 325 334 24% 23% 23% 10.8 10.8 10.9 10.8 19% 10.8 18% 1.2 1.3 1.3 1.4 1.0 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 1) “Fixed network” revenues includes revenues from Fixed network, Wholesale services, Online consumer services, Value-added services and Fixed network related others 10 2) Adjusted for the reduction in MTR–rates (Q3 = €58 million revenue)